CFPB Takes Action Against Carrington Mortgage for Depriving Homeowners of CARES Act Rights | Consumer Protection Agency

WASHINGTON, DC – The Consumer Financial Protection Bureau (CFPB) is taking action against Carrington Mortgage Services for fraudulent activities or practices under the Consumer Financial Protection Act in connection with the approval of mortgages. The CFPB found that Carrington failed to implement several safeguards, providing borrowers with federally subsidized mortgage loans who were facing financial difficulties, during the COVID-19 emergency. The CFPB found that Carrington misled some homeowners who sought forbearance under the CARES Act by paying delinquent late fees, misleading consumers about forbearance and refunds. choices, and misreporting the creditworthiness of borrowers to the three major credit reporting companies: Equifax, Experian, and TransUnion. The CFPB is ordering Carrington to pay back any late fees, fix its bad business practices, and pay a $5.25 million fine will be deposited into the CFPB’s grant fund.

“Carrington Mortgage illegally withheld mortgage protection, charged false fees, and reported false information to credit reporting companies,” said CFPB Director Rohit Chopra. “Homeowners were defrauded and deprived of critical protection at a time when they most needed help.”

Carrington Mortgage Services is a non-bank mortgage company headquartered in Anaheim, California. Carrington operates in all 50 states and services many federally backed mortgage loans, which are made or guaranteed by federal agencies or government-sponsored entities (GSEs). . As of September 2020, Carrington has serviced nearly half a million federally subsidized mortgages: more than 65% of Federal Housing Administration loans, nearly 20% of US Department of Agriculture loans , more than 10% of Veterans Benefits Administration loans, and about 5.% of loans sponsored by GSEs.

In 2020, Congress passed the CARES Act, which provided mortgage protection to borrowers with federally sponsored loans who are experiencing financial hardship during the COVID-19 emergency. One of the main protections of the mortgage is that it is required to give permission for up to 180 days when requested. Borrowers also received special credit reporting protections. Federal agencies and GSEs also issued their own guidance to servicers about assistance for borrowers during the pandemic.

The CFPB investigated Carrington and found that they violated the Consumer Financial Protection Act when they misrepresented the requirements of the CARES Act and federal guidelines. target. The company misrepresented borrowers that they could not get 180 days of forbearance when requested and some borrowers could not forbear at all. Carrington also pointed out that landlords have to provide more proof than is actually required by law, and that the company issued late payments if not four allowed.

Specifically, the CFPB found that Carrington:

  • Late fees have been paid incorrectly: Carrington misled some borrowers, telling them they had to pay late charges they didn’t owe while their accounts were in default. Carrington also lied to patient borrowers that they would be “investigated” or that old charges had been “investigated.” In some cases, Carrington mistakenly made late payments.
  • Giving false information about immunity: Carrington told some homeowners they need to make their monthly payments “immediately” and could face enforcement action if they don’t. In fact, no payment was required and the homeowners could not face foreclosure proceedings. The company also misled the homeowners that they need to provide specific reasons in order to receive the forbearance if it is only necessary to prove financial difficulties during the pandemic. Carrington also told homeowners that in order to get a forbearance of more than 90 days, they must make another request after the first 90 days.
  • Delinquent homeowner credit reports: Carrington illegally provided information to consumer reporting companies that some borrowers’ information was compromised, rather than now, by although homeowner comments are currently allowed. Carrington has also incorrectly reported on the criminality of some landlords in tolerating those who failed when they did. Carrington failed to immediately notify the three major credit reporting companies about the errors.

Enforcement Procedures

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against entities that violate consumer financial protection laws, including engaging in unfair, deceptive, or violence. The CFPB’s investigation found that Carrington violated the Act’s prohibition on deceptive practices, as well as certain provisions of the Fair Credit Reporting Act. and its implementing rules, Regulation V.

The order requires Carrington to:

  • Offer a discount to customers: Carrington should do an audit to make sure it’s returned to customers, if not, return it.
  • Fix its business problems: Carrington must review the agency’s staff and provide training related to the CARES Act in accordance with the agency’s and GSE’s guidelines. The company should also establish policies and procedures to prevent problems from happening again.
  • Pay $5.25 million in fines: Carrington must pay a $5.25 million penalty to the CFPB, which will be deposited into the CFPB grants.

Read today’s order.

Consumers can submit complaints about mortgages and other financial products or services by visiting CFPB website or by phone (855) 411-CFPB (2372).

Employees of companies who believe their company has violated federal consumer protection laws are encouraged to submit information about what they know. whistleblower@cfpb.gov.

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The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps the consumer financial market work by making the rules more effective, by consistently and fairly enforcing those rules. , and by empowering consumers to take more control of their financial lives. For more information, visit www.consumerfinance.gov.

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